The median total compensation for CEOs at the nation's largest corporations increased 0.5% in 2013 to $4.9 million, primarily the result of sharply lower executive pension values, according to a new analysis of proxy statements of 430 companies in the S&P 1500 index by Towers Watson.
The median pay would have increased 4.3% had the change in pension values been excluded.
“The limited size of total pay increases can be attributed to much lower values for executive pensions, driven down by higher interest rates,” a Towers Watson news release about the analysis said.
Broken out by market size, median total pay for CEOs of S&P 500 companies was down 3.5%, while median pay of CEOs of S&P 400 midcap companies and S&P 600 small-cap companies rose 2.1% and 2.5%, respectively.
Total pay, as reported in the proxy statements, consists of base salary; actual annual and long-term cash bonuses; grant-date value of long-term incentives, such as stock options, restricted stock and long-term performance shares; value of perquisites; earnings from deferred compensation; and change in the value of pension benefits.
In 2012, the median CEO pay increased 5.7%.
But the median realized pay increased sharply in 2013, up 14.3% to $4.5 million. Realized pay “takes into consideration the current value of a CEO's outstanding stock-based rewards … reflecting a strong stock market performance” last year, the news release said.
The aggregate 30% rise last year in total returns of stocks of the companies analyzed outpaced the rise in median CEO pay.
Robert Newbury, director of the executive compensation resources unit at Towers Watson, said CEO pay is better aligned with shareholder interests. “Certainly, it is a work in progress,” Mr. Newbury said.
In non-binding say-on-pay voting on the pay packages of CEOs and other top executives, shareholders voted an average level of support of 92% so far this year through April 11, compared to 90% for all of last year.
Only one company failed to achieve a majority vote of support for its executive pay so far this year, compared to 58 companies in 2013.
Hologic Inc. received only 34% of shareholder support for its executive program, according to the company's Securities and Exchange Commission filing.
The Towers Watson CEO pay analysis is based on the companies that filed through March 31 proxy statements that disclosed 2013 pay.